Futures hover after yesterday's rally
David Russell | [email protected]
S&P 500 futures are fractionally lower and European indexes are seesawing in a range, though mostly positive. Asia gained in the overnight session, led by a 2 percent move in Tokyo.
The S&P 500 has been pulling back in the last four weeks, consolidating after a blistering seven-month rally drove the index into record territory earlier this year. Yesterday's 1.5 percent surge was triggered by a strong retail-sales report and lower-than-expected initial jobless claims. Automobile sales were especially robust, showing that Americans have the confidence to spend on big-ticket items.
Attention is now likely to focus on the next Federal Reserve meeting on Wednesday. Worries that Chairman Ben Bernanke would reduce monetary stimulus drove up interest rates last month and spooked investors. Today's producer price index at 8:30 a.m. ET and Tuesday's consumer price index will provide inflation data and could shape expectations about the central bank's next move. Veteran Fed watcher Jon Hilsenrath wrote in today's Wall Street Journal that Bernanke will take a dovish stance next week.
The other big economic report today is the University of Michigan's consumer sentiment number at 9:55 a.m. ET. Industrial production will also be announced at 9:15 a.m. ET.
optionMONSTER's reseachLAB market screener shows strength over the last month in companies selling expensive items such as jewelry and motor homes. Telecom suppliers have also been strong amid indications that big carriers will increase capital spending. (Yesterday saw bullish call buying in Finisar and Tellabs.)
Weak economic growth in emerging markets have hurt companies exposed to the global economy, including coal miners and basic metals.
Stocks that are sensitive to higher interest rates, especially utilities and real-estate investment trusts, have also lagged in the last month. They may rebound if rates fall.
Commodities are modestly higher this morning. Oil and silver both advanced half a percent, copper is up about one-third of a percent, and grains are mixed. Foreign-exchange trading is more bearish, with the euro down and the Japanese yen higher across the board.
The yen is important to watch because a big decline in the currency earlier this year drove up the Nikkei index, supporting sentiment globally.
In company-specific news, Smith & Wesson is indicated higher after pre-announcing strong quarterly results. Restoration Hardware also climbed after its numbers beat expectations and management raised guidance. Ocwen Financial is bid higher, as well, after agreeing to buy servicing rights on another $78 billion of home loans.